Evaluation of the Impact of Changes in Commodity Income Support Measures Included in the Agricultural Act of 2014 on Equitable Louisiana Rice Production Rental Arrangements

• Main Author: Ould Abderrahmane, Abdallahi
• Other Authors: Kazmierczak, Richard F.,Jr.
• Format: Others
• Language: en
• Published: LSU 2015
• Subjects: Agricultural Economics
• Online Access: http://etd.lsu.edu/docs/available/etd-06302015-151438/

ABSTRACT This research uses a Simetar simulation technique to evaluate the effect of the adoption of the Price Loss Coverage program included in the 2014 Agricultural Act on Louisianas rice equitable rental arrangement choices. Two scenarios are examined: one in which prices of the last three years are detrended and a second one in which they are not detrended. Each scenario includes six rental arrangements (Cash rent, Fixed Price, Fixed Yield, 60/40, 70/30, 80/20) and each rental arrangement has four adjustments (base, price trigger, yield trigger, and price and yield trigger). Three different risk measure analysis were conducted: Mean-Variance, Value at Risk (VaR), and Stochastic Efficiency with respect to a Function (SERF) to measure and analyze the risk associated with each option. In addition to that, the study reviews some provisions of the newly adopted Farm Bill (PLC and ARC-Parish). The Mean-Variance results show that for the tenant the 80/20 share with yield-price trigger (6D), the 70/30 share yield-price trigger (5D), and the 60/40 share with yield-price trigger (4D), dominate all the other Louisiana rice rental arrangements. For the landlord, the Fixed Dollar Base (1A), Fixed Price Base (2A), Fixed Yield Base (3A), dominate all the other Louisiana rice rental arrangements. The VaR results show that for the tenant the 80/20 share with yield-price trigger (6D) dominates all the other Louisiana rice rental arrangements, and for the landlord the Fixed Dollar Base (1A), Fixed Dollar with yield trigger (1B), Fixed Price Base (2A), and Fixed Price with yield trigger (2B) dominate all the other Louisiana rice rental arrangements. Finally, the SERF results show that the tenant best choices are the 80/20 share with any trigger option (6A, 6B, 6C, 6D), and the landlord best choices are the Fixed Yield or Fixed Price with any trigger option (2A, 2B, 2C, 2D,3A, 3B, 3C, 3D)